Diamondback Energy (FANG) FY2025 10-K Risk Factors: 10 New, 19 Dropped

What the changes say

Derivative settlement payments and trade policy volatility emerge as primary risks for oil and gas assets.
Undevloped acreage and strict delivery commitments intensify operational execution risks in the Permian Basin.
Debt leverage and tax attribute limitations constrain financial flexibility following recent acquisitions.

What changed since the prior 10-K

New

NewRisks Related to the Oil and Natural Gas Industry and Our Business
may create risks and uncertainties impacting our business
NewRisks Related to the Oil and Natural Gas Industry and Our Business
commodity price volatility, we may be prevented from fully realizing the benefits of increases in the prices of oil, natural gas and natural gas liquids above the price levels of the commodity price derivatives used to manage price risk
Market prices exceeding our commodity derivative contract prices could require significant cash settlement payments.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations
U.S. trade policies and tariffs may cause market volatility and reduce demand for oil and natural gas.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategy
Climate change regulations may increase compliance costs and create investment and reputational risks for hydrocarbon exploration.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
failure to complete proposed or future infrastructure projects could delay or eliminate potential efficiencies and related cost savings
Roughly 30% of our proved reserves are undeveloped and depend on capital expenditures that may face delays or increased costs.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
We may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contracts, which will result in deficiency payments to the counterparty and may have an adverse effect on our operations
Reduced Permian Basin production could prevent us from meeting oil delivery commitments, triggering deficiency payments.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
Legal proceedings brought against us could result in substantial liabilities and materially and adversely impact our financial condition
Legal proceedings, including contractual and royalty disputes, could result in substantial liabilities and negative publicity.
NewRisks Related to the Oil and Natural Gas Industry and Our Business
Failure to comply with cybersecurity and data privacy laws and regulations could have a material adverse effect on our reputation, results of operations or financial condition
Failure to protect IT systems and confidential data could harm our operations and reputation.
NewRisks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our results of operations, business flexibility and our ability to service our debt
Substantial debt incurred for acquisitions could restrict our business flexibility and ability to service debt.
NewRisks Related to Our Common Stock
The provision of our certificate of incorporation and bylaws requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against us and our directors, officers and employees
Our Delaware Court of Chancery exclusive forum provision may discourage stockholder lawsuits against us or our directors.

Dropped

DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
and results of operations could be materially and adversely affected. Any reputational damage associated with ESG factors may also adversely impact our ability to recruit and retain employees and customers
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Conservation measures and technological advances could reduce demand for oil and natural gas
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate
ESG developments reducing industry participation and third-party service availability.
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
We depend upon several significant purchasers for the sale of most of our oil and natural gas production. The loss of one or more of these purchasers could, among other factors, limit our access to suitable markets for the oil and natural gas we produce
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Derivatives reform legislation and related regulations could have an adverse effect on our ability to hedge risks associated with our business
SEC climate disclosure rules and associated legal challenges.
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
We rely on a few key employees whose absence or loss could adversely affect our business
Fuel conservation measures and alternative energy technological advances reducing demand.
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Our use of 2-D and 3-D seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
We own interests in certain pipeline projects and other joint ventures, and we may in the future enter into additional joint ventures, and our control of such entities is limited by provisions of the governing documents of such entities and by our percentage ownership in such entities
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
A terrorist attack or armed conflict could harm our business
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
We are subject to cybersecurity risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss
DroppedRisks Related to the Oil and Natural Gas Industry and Our Business
Evolving privacy-related laws could give rise to liabilities, which could adversely impact our business, results of operations or financial condition
DroppedRisks Related to Our Indebtedness
Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness
DroppedRisks Related to Our Indebtedness
We and our subsidiaries may still be able to incur substantial additional indebtedness in the future, which could further exacerbate the risks that we and our subsidiaries face
DroppedRisks Related to Our Indebtedness
Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities
DroppedRisks Related to Our Indebtedness
We depend on our subsidiaries for dividends and other payments
Capital intensity and longer development timelines for proved undeveloped reserves.
DroppedRisks Related to Our Indebtedness
Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk
DroppedRisks Related to Our Common Stock
The market value of our common stock could decline if large amounts of our common stock are sold following the Endeavor Acquisition and the pending Double Eagle Acquisition
Dependence on several significant purchasers for oil and natural gas sales.

Reworded

83% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves
Expanded to emphasize undeveloped acreage, lease retention obligations, and dependence on developing commercial quantities.
Was: Our success depends on finding, developing or acquiring additional reserves
69% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our commodity price derivatives could result in financial losses, may fail to protect us from declines in commodity prices, prevent us from fully benefiting from commodity price increases and may expose us to other risks, including counterparty credit risk
Updated derivative hedging periods to 2026 and 2027 production.
61% rewrittenRisks Related to Our Common Stock
tax-exempt rate, periodically promulgated by the IRS. This limitation, however, may be significantly increased if there is “net unrealized built-in gain” in the assets of the corporation undergoing the ownership change
Updated NOL carryforwards to $436 million, added capital loss carryforwards, and included Sitio acquisition attributes under Sections 382 and 383.
Was: to as the long-term tax-exempt rate, periodically promulgated by the IRS. This limitation, however, may be significantly increased if there is “net unrealized built-in gain” in the assets of the corporation undergoing the ownership change
59% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
U.S. tax legislation may adversely affect our business, results of operations, financial condition and cash flow
Narrowed tax legislation discussion from federal and state income tax laws to U.S. federal income tax laws.
56% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Risks relating to the transition to a low carbon economy could impose new costs on our operations that may have a material and adverse effect on us
Shifted climate transition risk framing from stakeholder focus to evolving views and updated battery technology references.
Was: The IRA and other risks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us
53% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our operations depend heavily on electrical power, internet and telecommunication infrastructure and information and computer systems. If any of these systems are compromised or unavailable, our business could be adversely affected
No substantive textual changes made to infrastructure and computer system dependencies.
53% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Geopolitics and market conditions for oil and natural gas, and particularly volatility in prices for oil and natural gas, have in the past adversely affected, and may in the future adversely affect, our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves
Added regional conflicts, political instability, and continued threat of trade restrictions to oil and gas price volatility factors.
Was: Market conditions for oil and natural gas, and particularly volatility in prices for oil and natural gas, have in the past adversely affected, and may in the future adversely affect, our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves
49% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
We may not be able to keep pace with technological developments in our industry
Retained the risk regarding keeping pace with technological developments without substantive text changes.
44% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Following the closing of the Endeavor Acquisition, the Endeavor equityholders have the ability to significantly influence our business, and their interest in our business may be different from that of other stockholders
42% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
We operate in areas of high industry activity, which may affect our ability to hire, train or retain qualified personnel needed to manage and operate our assets
38% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Drilling for oil and natural gas often involves unprofitable efforts, not only from dry wells but also from wells that are productive but do not produce sufficient oil or natural gas to return a profit at then realized prices after deducting drilling, operating and other costs
35% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our targets related to sustainability and emissions reduction initiatives, including our public statements and disclosures regarding them, may expose us to numerous risks
35% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our development and exploration operations and our ability to complete acquisitions require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could lead to a loss of properties and a decline in our oil and natural gas reserves
34% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Changing political and social perspectives on climate change and other environmental, social and governance factors may create risks and uncertainties impacting our business
28% rewrittenRisks Related to the Oil and Natural Gas Industry and Our Business
Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive
26% rewrittenRisks Related to Our Common Stock
A change of control could limit our use of net operating losses and certain other tax attributes
26% rewrittenRisks Related to Our Common Stock
Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of our company, which could adversely affect the price of our common stock

All 39 risk factors

Headings as the filing states them, in filing order.

Risks Related to the Oil and Natural Gas Industry and Our Business

01may create risks and uncertainties impacting our businessNew
02Geopolitics and market conditions for oil and natural gas, and particularly volatility in prices for oil and natural gas, have in the past adversely affected, and may in the future adversely affect, our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves53% rewritten
03Our commodity price derivatives could result in financial losses, may fail to protect us from declines in commodity prices, prevent us from fully benefiting from commodity price increases and may expose us to other risks, including counterparty credit risk69% rewritten
04commodity price volatility, we may be prevented from fully realizing the benefits of increases in the prices of oil, natural gas and natural gas liquids above the price levels of the commodity price derivatives used to manage price riskNew
05Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operationsNew
06Risks relating to the transition to a low carbon economy could impose new costs on our operations that may have a material and adverse effect on us56% rewritten
07our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategyNew
08Changing political and social perspectives on climate change and other environmental, social and governance factors may create risks and uncertainties impacting our business34% rewritten
09Our targets related to sustainability and emissions reduction initiatives, including our public statements and disclosures regarding them, may expose us to numerous risks35% rewritten
10Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves83% rewritten
11Our development and exploration operations and our ability to complete acquisitions require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could lead to a loss of properties and a decline in our oil and natural gas reserves35% rewritten
12failure to complete proposed or future infrastructure projects could delay or eliminate potential efficiencies and related cost savingsNew
13Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings and slow our growth
14Drilling for oil and natural gas often involves unprofitable efforts, not only from dry wells but also from wells that are productive but do not produce sufficient oil or natural gas to return a profit at then realized prices after deducting drilling, operating and other costs38% rewritten
15We may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contracts, which will result in deficiency payments to the counterparty and may have an adverse effect on our operationsNew
16The loss of one or more of our customers or their inability to meet their obligations may adversely affect our financial results
17Our method of accounting for investments in oil and natural gas properties may result in impairment of asset value
18Our estimated reserves and EURs are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves
19The standardized measure of our estimated proved reserves is not necessarily the same as the current market value of our estimated proved reserves
20Our producing properties are located in the Permian Basin of West Texas, making us vulnerable to risks (including weather-related risks) associated with operating in a single geographic area. In addition, we have a large amount of proved reserves attributable to a small number of producing horizons within this area
21The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies, oilfield services or personnel may restrict our operations
22Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows
23The marketability of our production is dependent upon transportation and other facilities, certain of which we do not control. If these facilities are unavailable, our operations could be interrupted and our revenues reduced
24Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive28% rewritten
25U.S. tax legislation may adversely affect our business, results of operations, financial condition and cash flow59% rewritten
26We operate in areas of high industry activity, which may affect our ability to hire, train or retain qualified personnel needed to manage and operate our assets42% rewritten
27Operating hazards and uninsured risks may result in substantial losses and could prevent us from realizing profits
28We may not be able to keep pace with technological developments in our industry49% rewritten
29Our operations depend heavily on electrical power, internet and telecommunication infrastructure and information and computer systems. If any of these systems are compromised or unavailable, our business could be adversely affected53% rewritten
30Legal proceedings brought against us could result in substantial liabilities and materially and adversely impact our financial conditionNew
31Failure to comply with cybersecurity and data privacy laws and regulations could have a material adverse effect on our reputation, results of operations or financial conditionNew
32Following the closing of the Endeavor Acquisition, the Endeavor equityholders have the ability to significantly influence our business, and their interest in our business may be different from that of other stockholders44% rewritten

Risks Related to Our Indebtedness

33Our substantial indebtedness could adversely affect our results of operations, business flexibility and our ability to service our debtNew
34A downgrade in our debt ratings could restrict our access to, and negatively impact the terms of, current or future financings or trade credit

Risks Related to Our Common Stock

35A change of control could limit our use of net operating losses and certain other tax attributes26% rewritten
36tax-exempt rate, periodically promulgated by the IRS. This limitation, however, may be significantly increased if there is “net unrealized built-in gain” in the assets of the corporation undergoing the ownership change61% rewritten
37We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock
38Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of our company, which could adversely affect the price of our common stock26% rewritten
39The provision of our certificate of incorporation and bylaws requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against us and our directors, officers and employeesNew

Other Diamondback Energy 10-Ks

FY2024 10-K risk factors
48 risks
Diamondback Energy's risk profile centers heavily on commodity price volatility in the Permian Basin, climate change regulations, and debt leverage following the Endeavor acquisition.
Filed Feb 26, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.